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What affects the Bitcoin price?

Bitcoin's nature is ultra-volatile, which means that the BTC price may give traders and investors plenty of surprises. In May, 2021, Bitcoin rose to its all-time high of $60,000, and later gained a foothold on the $50,000 mark. There have also been heavy swings in the opposite direction. The BTC price took a 60% dive during the so-called "Crypto Winter" of 2018, sinking to $3,000.

What affects the Bitcoin price?

Bitcoin's nature is ultra-volatile, which means that the BTC price may give traders and investors plenty of surprises. In May, 2021, Bitcoin rose to its all-time high of $60,000, and later gained a foothold on the $50,000 mark. There have also been heavy swings in the opposite direction. The BTC price took a 60% dive during the so-called "Crypto Winter" of 2018, sinking to $3,000.

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Major BTC price drivers

Bitcoin price complies with the law of supply and demand. Bitcoin supply is sometimes compared to gold, as there are a limited number of Bitcoins (the same as the quantity of gold) that can be mined – 21 million, to be exact. The demand side here works the same as with any other asset: the more investors are willing to enter the Bitcoin market, the higher the price of Bitcoin.

Media is the most important weapon and source of influence on the price of Bitcoin and other cryptocurrencies. Greater awareness boosts people’s understanding and drives investors’ interest. With information spreading like wildfire, the BTC price can be significantly hit by the mass effect of an important news piece. Always keep abreast of the latest Bitcoin news to catch the best trading opportunities.

Political events can also drive the Bitcoin price in either direction. Generally, BTC price changes are opposite to what happens with fiat currencies. The instability of official currencies makes people more interested in alternatives such as Bitcoin and altcoins. By maintaining a leading position in the cryptocurrency market, Bitcoin is becoming an increasingly popular choice among investors.

Bitcoin and cryptocurrencies are still considered new concepts, which are difficult for governments to adopt. Many countries are still changing their cryptocurrency regulations on a regular basis. Although Bitcoin is independent and decentralised, government decisions, such as the closure of crypto trading platforms or the adoption of crypto at the state level, can have a direct effect on the price of Bitcoin and on cryptocurrency investors.

Bitcoin price instability may also be affected by the Bitcoin community in its effort to reach a consensus regarding the cryptocurrency's future development. These decisions influence the Bitcoin blockchain and the entire Bitcoin ecosystem. A lack of consensus may lead to a hard fork, which is a separation of Bitcoin into two different blocks, each following its own set of rules. This is how Bitcoin Cash was created.

Bitcoin summary

Launched in 2009, Bitcoin is the world's first decentralised cryptocurrency. Invented by an individual or group using the pseudonym Satoshi Nakamoto, Bitcoin shaped the cryptocurrency market and paved the way for other crypto platforms.

As the first decentralised digital payment system in the world, Bitcoin is powered by blockchain technology. There is a finite number of Bitcoins that can ever be mined - 21 million. This number is hard-coded into the system. Today, miners produce a new block every 10 minutes and get 6.25 Bitcoin as a reward.

Bitcoin is the leading cryptocurrency in terms of market capitalisation, as well as price. Bitcoin's current price is hovering around the $50,000 mark. Analysts consider 2021 to be the most important year for Bitcoin and make positive forecasts regarding its future price. As of September 2021, Bitcoin capitalisation was worth roughly $972 billion.

Bitcoin can be stored in different crypto wallets. Users can choose between so-called "hot wallets" (software applications) or "cold wallets" (special hardware devices). While hot wallets are considered more agile for exchanging crypto, cold wallets are viewed as a safer option for storing your coins for a long period of time. In any case, all Bitcoin wallets are secured cryptographically, while the transfer of BTC requires a "private key".

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Bitcoin use cases

Digital cash

Bitcoin has become a strong alternative to traditional fiat currency, especially when it comes to digital payments. You can even buy a cup of your morning coffee with BTC.

Speculative asset

Bitcoin’s price is consistently volatile, creating strong potential for speculation. BTC is the most popular cryptocurrency amongst traders, who profit from its price swings.

Store of value

Bitcoin has proven to be a lucrative investment. As of September 2021, Bitcoin was labelled as ‘digital gold’ with 76 per cent growth in just a year.

Bitcoin price chart: historical data

Bitcoin price has undergone dramatic price swings since its inception.
Year
Bitcoin price performance
2009
Bitcoin goes public and BTC mining begins.
2010
Bitcoin is traded on a Bitcoin forum for the first time. Laszlo Hanyecz makes the first real-world Bitcoin transaction by buying two pizzas for 10,000 BTC.
2011-2012
Bitcoin’s price peaks at $31 per BTC and eventually crashes to less than 10% of that value.
2013
Bitcoin climbs to $1,000 before falling to $300, leading to rumours about its permanent collapse.
2014
Bitcoin’s price struggles. Microsoft starts accepting BTC as payment.
2015-2016
Bitcoin’s price rebounds, reaching $770 in 2016.
2017
Massive price spike caused by a wave of global interest. BTC surges from $1,000 to almost $20,000.
2018
Bitcoin’s price suffers from a rapid drop. The cryptocurrency’s price tanks over 60% and ends the year at a low point of $3,200.
2019
Bitcoin establishes itself as a widely accepted cryptocurrency as BTC awareness and adoption increases. Bitcoin’s price rises to around $10,000, signalling the end of the Crypto Winter of 2018.
2020-2021
Bitcoin’s market value surpasses $1 trillion, as the price of the cryptocurrency skyrockets to an all-time high of $61,800 in March 2021. Growing Bitcoin adoption by institutional investors, including Tesla, Square, MicroStrategy and PayPal, contributes to the bullish Bitcoin price forecast for the end of the year and beyond.

Bitcoin FAQ

When we talk about new Bitcoins we usually say that they are “mined”. New Bitcoins enter circulation as block rewards, produced by “miners” who use expensive electronic equipment to earn or “mine” them. What does that mean?

‘Mining’ is a decentralised and competitive process that involves individuals who process blockchain transactions, secure the network and collect new bitcoins as a reward. Bitcoin protocol is developed in such a way that new bitcoins are developed at a fixed rate, which makes mining a highly competitive business. Bitcoin mining does not involve any central governing body.

Over time, the production of new bitcoins slows down at a set rate. The number of newly created bitcoins is automatically halved about every four years until 21 million bitcoins are mined.

Bitcoin halving occurs when every 210,000 blocks – the total number of bitcoins that miners can get as a reward is divided by two. This means that the reward for mining new blocks is reduced, and miners will receive 50% less for verifying Bitcoin transactions. This occurs approximately every four years.

Halving is not only important for miners, but also for traders and investors. Halving reduces the number of bitcoins mined, dividing the supply of new BTC by two. This could potentially lead to an increase in the price of Bitcoin if demand remains high enough.

This has already occurred during the previous three halvings. Each of them led to higher bitcoin prices. However, each halving is unique, and investors should keep a close eye on crypto market news and analysts' price predictions so as not to miss the best bitcoin trading opportunities with Currency.com.

The first thing to remember is that the crypto market, including Bitcoin, is extremely volatile. Since its inception in 2009, Bitcoin has experienced wild price swings, bringing some investors huge profits and doling out massive losses to others.

The popularity of Bitcoin trades is constantly growing, providing immense opportunities for traders. It has become a strong alternative to traditional Forex markets and has consolidated its position as the world's most valuable cryptocurrency.

Traders can always profit from Bitcoin price swings with us. You can either trade short or long, depending on the BTC price dynamic, and benefit from the price difference. Follow the latest crypto market news and analyse the live Bitcoin chart at Currency.com to spot the best BTC trading opportunities.

Crypto and fiat currencies have two main features in common: they both enable payments and both are used as a store of value. Crypto and fiat currencies have two main features in common: they both enable payments and both are used as a store of value.

Bitcoin has become a new form of trust for the future financial system. The most revolutionary aspect of cryptocurrency is that it can be spent or received by anyone, anywhere, and at any time without the involvement of any bank or government authority.

While the world's currencies are subject to inflation and central banks can print more of them if necessary, bitcoins are limited to 21 million units, making them an even rarer and more valuable asset than gold.